Traditional beta-index exchange traded funds are carving out a larger slice of the fund market share as investors turn to passive, index-based styles to better capture market returns.
In the 12-months ended Jun 30, passive funds have brought in 68% of asset inflows, with ETFs making up 35% and passive mutual funds 33%, while actively managed mutual funds brought in 32% of assets, writes John Rekenthaler, V.P. of research for Morningstar.
Of the $134 billion, active funds attracted, $30 billion were in target-date funds, so active management really brought in about $100 billion in assets.
“Target-date sales are in a sense accidental, as target-date funds sell into a captive audience that must purchase funds from the target-date family that is placed in front of it,” Rekenthaler said. “After all, it’s not as if those investors deliberately chose active fund management. And that happy accident is dissipating.”
Instead, more investors are turning to passive investments as an alternative, with Vanguard gaining market share.